| Schedule of New Accounting Pronouncements and Changes in Accounting Principles |
The effect of the retrospective presentation change related to the net periodic cost of our defined benefit pension and other postretirement employee benefits plans on our Statements of Consolidated Operations was as follows:
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(In Millions) |
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Year Ended December 31, 2017 |
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Year Ended December 31, 2016 |
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As Adjusted |
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Without Adoption of ASU 2017-07 |
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Effect of Change |
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As Adjusted |
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Without Adoption of ASU 2017-07 |
|
Effect of Change |
Cost of goods sold and operating expenses |
$ |
(1,398.4 |
) |
|
$ |
(1,400.7 |
) |
|
$ |
2.3 |
|
|
$ |
(1,274.4 |
) |
|
$ |
(1,278.7 |
) |
|
$ |
4.3 |
|
Selling, general and administrative expenses |
$ |
(102.9 |
) |
|
$ |
(95.1 |
) |
|
$ |
(7.8 |
) |
|
$ |
(115.8 |
) |
|
$ |
(106.3 |
) |
|
$ |
(9.5 |
) |
Miscellaneous - net |
$ |
25.5 |
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|
$ |
27.0 |
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|
$ |
(1.5 |
) |
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$ |
(33.6 |
) |
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$ |
(32.0 |
) |
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$ |
(1.6 |
) |
Operating income |
$ |
390.2 |
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$ |
397.2 |
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$ |
(7.0 |
) |
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$ |
130.7 |
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$ |
137.5 |
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$ |
(6.8 |
) |
Other non-operating income |
$ |
10.2 |
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$ |
3.2 |
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$ |
7.0 |
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$ |
7.3 |
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$ |
0.5 |
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$ |
6.8 |
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Net income |
$ |
363.1 |
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|
$ |
363.1 |
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|
$ |
— |
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$ |
199.3 |
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$ |
199.3 |
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|
$ |
— |
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The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of Topic 606 were as follows:
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(In Millions) |
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Balance at December 31, 2017 |
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Adjustments due to Topic 606 |
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Balance at January 1, 2018 |
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
978.3 |
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$ |
— |
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$ |
978.3 |
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Accounts receivable, net |
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106.7 |
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|
76.6 |
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|
183.3 |
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Inventories |
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138.4 |
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(51.4 |
) |
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87.0 |
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Supplies and other inventories |
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88.8 |
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— |
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|
88.8 |
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Derivative assets |
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37.9 |
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11.6 |
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49.5 |
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Income tax receivable, current |
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13.3 |
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— |
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13.3 |
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Loans to and accounts receivables from the Canadian Entities |
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51.6 |
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— |
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51.6 |
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Current assets of discontinued operations |
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118.5 |
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— |
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118.5 |
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Other current assets |
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11.1 |
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— |
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11.1 |
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TOTAL CURRENT ASSETS |
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1,544.6 |
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|
36.8 |
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1,581.4 |
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PROPERTY, PLANT AND EQUIPMENT, NET |
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1,033.8 |
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— |
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|
1,033.8 |
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OTHER ASSETS |
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Deposits for property, plant and equipment |
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17.8 |
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— |
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|
17.8 |
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Income tax receivable, non-current |
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235.3 |
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— |
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|
235.3 |
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Non-current assets of discontinued operations |
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20.3 |
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— |
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20.3 |
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Other non-current assets |
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101.6 |
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— |
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|
101.6 |
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TOTAL OTHER ASSETS |
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375.0 |
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— |
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|
375.0 |
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TOTAL ASSETS |
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$ |
2,953.4 |
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$ |
36.8 |
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$ |
2,990.2 |
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LIABILITIES |
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
99.5 |
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$ |
1.4 |
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$ |
100.9 |
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Accrued employment costs |
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52.7 |
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— |
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52.7 |
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State and local taxes payable |
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30.2 |
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— |
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30.2 |
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Accrued interest |
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31.4 |
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— |
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|
31.4 |
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Contingent claims |
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55.6 |
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— |
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55.6 |
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Partnership distribution payable |
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44.2 |
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— |
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|
44.2 |
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Current liabilities of discontinued operations |
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75.0 |
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|
— |
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|
75.0 |
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Other current liabilities |
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63.6 |
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|
1.4 |
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|
65.0 |
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TOTAL CURRENT LIABILITIES |
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452.2 |
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|
2.8 |
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|
455.0 |
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PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES |
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257.7 |
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— |
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|
257.7 |
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ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS |
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167.7 |
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— |
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|
167.7 |
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LONG-TERM DEBT |
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2,304.2 |
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— |
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|
2,304.2 |
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NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
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52.2 |
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— |
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|
52.2 |
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OTHER LIABILITIES |
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163.5 |
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— |
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|
163.5 |
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TOTAL LIABILITIES |
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3,397.5 |
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|
2.8 |
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|
3,400.3 |
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EQUITY |
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CLIFFS SHAREHOLDERS' EQUITY (DEFICIT) |
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(444.3 |
) |
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34.0 |
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(410.3 |
) |
NONCONTROLLING INTEREST |
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0.2 |
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— |
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|
0.2 |
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TOTAL EQUITY (DEFICIT) |
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(444.1 |
) |
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34.0 |
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(410.1 |
) |
TOTAL LIABILITIES AND EQUITY (DEFICIT) |
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$ |
2,953.4 |
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$ |
36.8 |
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$ |
2,990.2 |
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The impact of adoption on our Statements of Consolidated Operations and Statements of Consolidated Financial Position is as follows:
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($ in Millions) |
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Year Ended
December 31, 2018
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As Reported |
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Balances without Adoption of Topic 606 |
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Effect of Change |
REVENUES FROM PRODUCT SALES AND SERVICES |
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Product |
$ |
2,172.3 |
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$ |
2,108.1 |
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$ |
64.2 |
|
Freight and venture partners' cost reimbursements |
160.1 |
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|
156.2 |
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|
3.9 |
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|
2,332.4 |
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|
2,264.3 |
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|
68.1 |
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COST OF GOODS SOLD AND OPERATING EXPENSES |
(1,522.8 |
) |
|
(1,513.2 |
) |
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(9.6 |
) |
SALES MARGIN |
809.6 |
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|
751.1 |
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|
58.5 |
|
OTHER OPERATING INCOME (EXPENSE) |
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Selling, general and administrative expenses |
(116.8 |
) |
|
(116.8 |
) |
|
— |
|
Miscellaneous - net |
(19.6 |
) |
|
(19.6 |
) |
|
— |
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|
(136.4 |
) |
|
(136.4 |
) |
|
— |
|
OPERATING INCOME |
673.2 |
|
|
614.7 |
|
|
58.5 |
|
OTHER INCOME (EXPENSE) |
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Interest expense, net |
(118.9 |
) |
|
(118.9 |
) |
|
— |
|
Loss on extinguishment of debt |
(6.8 |
) |
|
(6.8 |
) |
|
— |
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Other non-operating income |
17.2 |
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|
17.2 |
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|
— |
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(108.5 |
) |
|
(108.5 |
) |
|
— |
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
564.7 |
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|
506.2 |
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|
58.5 |
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INCOME TAX BENEFIT |
475.2 |
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|
487.5 |
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(12.3 |
) |
INCOME FROM CONTINUING OPERATIONS |
1,039.9 |
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|
993.7 |
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|
46.2 |
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INCOME FROM DISCONTINUED OPERATIONS, net of tax |
88.2 |
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|
88.2 |
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|
— |
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NET INCOME ATTRIBUTABLE TO CLIFFS SHAREHOLDERS |
$ |
1,128.1 |
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|
$ |
1,081.9 |
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$ |
46.2 |
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EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - BASIC |
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Continuing operations |
$ |
3.50 |
|
|
$ |
3.34 |
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|
$ |
0.16 |
|
Discontinued operations |
0.30 |
|
|
0.30 |
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|
— |
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|
$ |
3.80 |
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|
$ |
3.64 |
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|
$ |
0.16 |
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EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CLIFFS SHAREHOLDERS - DILUTED |
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Continuing operations |
$ |
3.42 |
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|
$ |
3.27 |
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|
$ |
0.15 |
|
Discontinued operations |
0.29 |
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|
0.29 |
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|
— |
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|
$ |
3.71 |
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|
$ |
3.56 |
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|
$ |
0.15 |
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AVERAGE NUMBER OF SHARES (IN THOUSANDS) |
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Basic |
297,176 |
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|
297,176 |
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Diluted |
304,141 |
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|
304,141 |
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The increased revenue recognized under Topic 606 is due to higher tons shipped and a higher realized revenue rate in December 2018 versus December 2017. Under the previous accounting standard, December 2017 shipments would have been recognized as 2018 sales due to the fact that title and risk of loss does not transfer until payment is received from our customers.
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(In Millions) |
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|
December 31, 2018 |
|
|
As Reported |
|
Balances without Adoption of Topic 606 |
|
Effect of Change |
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
823.2 |
|
|
$ |
823.2 |
|
|
$ |
— |
|
Accounts receivable, net |
|
226.7 |
|
|
108.7 |
|
|
118.0 |
|
Inventories |
|
87.9 |
|
|
141.3 |
|
|
(53.4 |
) |
Supplies and other inventories |
|
93.2 |
|
|
93.2 |
|
|
— |
|
Derivative assets |
|
91.5 |
|
|
60.7 |
|
|
30.8 |
|
Income tax receivable, current |
|
117.3 |
|
|
117.3 |
|
|
— |
|
Current assets of discontinued operations |
|
12.4 |
|
|
12.4 |
|
|
— |
|
Other current assets |
|
27.4 |
|
|
27.4 |
|
|
— |
|
TOTAL CURRENT ASSETS |
|
1,479.6 |
|
|
1,384.2 |
|
|
95.4 |
|
PROPERTY, PLANT AND EQUIPMENT, NET |
|
1,286.0 |
|
|
1,286.0 |
|
|
— |
|
OTHER ASSETS |
|
|
|
|
|
|
Deposits for property, plant and equipment |
|
83.0 |
|
|
83.0 |
|
|
— |
|
Income tax receivable, non-current |
|
121.3 |
|
|
121.3 |
|
|
— |
|
Deferred income taxes |
|
464.8 |
|
|
477.1 |
|
|
(12.3 |
) |
Other non-current assets |
|
94.9 |
|
|
94.9 |
|
|
— |
|
TOTAL OTHER ASSETS |
|
764.0 |
|
|
776.3 |
|
|
(12.3 |
) |
TOTAL ASSETS |
|
$ |
3,529.6 |
|
|
$ |
3,446.5 |
|
|
$ |
83.1 |
|
|
|
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|
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|
LIABILITIES |
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Accounts payable |
|
$ |
186.8 |
|
|
$ |
184.9 |
|
|
$ |
1.9 |
|
Accrued employment costs |
|
74.0 |
|
|
74.0 |
|
|
— |
|
State and local taxes payable |
|
35.5 |
|
|
35.5 |
|
|
— |
|
Accrued interest |
|
38.4 |
|
|
38.4 |
|
|
— |
|
Partnership distribution payable |
|
43.5 |
|
|
43.5 |
|
|
— |
|
Current liabilities of discontinued operations |
|
6.7 |
|
|
6.7 |
|
|
— |
|
Other current liabilities |
|
83.3 |
|
|
83.7 |
|
|
(0.4 |
) |
TOTAL CURRENT LIABILITIES |
|
468.2 |
|
|
466.7 |
|
|
1.5 |
|
PENSION AND POSTEMPLOYMENT BENEFIT LIABILITIES |
|
248.7 |
|
|
248.7 |
|
|
— |
|
ENVIRONMENTAL AND MINE CLOSURE OBLIGATIONS |
|
172.0 |
|
|
172.0 |
|
|
— |
|
LONG-TERM DEBT |
|
2,092.9 |
|
|
2,092.9 |
|
|
— |
|
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
|
8.3 |
|
|
8.3 |
|
|
— |
|
OTHER LIABILITIES |
|
115.3 |
|
|
115.3 |
|
|
— |
|
TOTAL LIABILITIES |
|
3,105.4 |
|
|
3,103.9 |
|
|
1.5 |
|
EQUITY |
|
|
|
|
|
|
CLIFFS SHAREHOLDERS' EQUITY |
|
424.2 |
|
|
342.6 |
|
|
81.6 |
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
3,529.6 |
|
|
$ |
3,446.5 |
|
|
$ |
83.1 |
|
|